UvA-DARE (Digital Academic Repository) The story behind the Dutch model: the consensual politics of wage restraint Hendriks, C. Publication date 2011 Link to publication Citation for published version (APA): Hendriks, C. (2011). The story behind the Dutch model: the consensual politics of wage restraint. Uitgeverij BOXPress. General rights It is not permitted to download or to forward/distribute the text or part of it without the consent of the author(s) and/or copyright holder(s), other than for strictly personal, individual use, unless the work is under an open content license (like Creative Commons). Disclaimer/Complaints regulations If you believe that digital publication of certain material infringes any of your rights or (privacy) interests, please let the Library know, stating your reasons. In case of a legitimate complaint, the Library will make the material inaccessible and/or remove it from the website. Please Ask the Library: https://uba.uva.nl/en/contact, or a letter to: Library of the University of Amsterdam, Secretariat, Singel 425, 1012 WP Amsterdam, The Netherlands. You will be contacted as soon as possible. UvA-DARE is a service provided by the library of the University of Amsterdam (https://dare.uva.nl) Download date:26 Sep 2021 chapter 1 The Polder Model & the role of wage restraint within it 1.1 The Dutch Polder Model introduction Discussing comparative economic performance in October 1996, the Economist concluded that the Netherlands ‘has a fair claim to be the most successful, all around, in Europe. Which is perhaps why they are so rarely written about’. The lack of attention for the Dutch strategy was about to change radically within a few months time, however, when books and articles on Dutch socio-economic policymaking flooded the po­­litical and academic scene. What triggered this stream of attention? Whereas for ma ny years the Neth­­er lands was con si de red to be ‘the sick man of Europe’ and was suf fe ring from a Dutch Di sease, it had in the second half of the 1990s seemingly turned into a Dutch Miracle: it had been able to cre ate jobs, minimize un­­­­­em­­ploy ment and sub stan­­tially reduce bud get de fi cits while at the same time largely pre­­­ser ving a re­­la ti ve ly ge ne rous welfare state and main tai ning low levels of po verty and in come in­­e qua lity. More­­­over, it had achie ved this in a con­­­­sen­­sual way; that is, by talking ra­­ther than fight ing. Ac cor­­ding to many, the Ne­­­­therlands had found a middle-way, a ‘Third Way’, be tween the harsh reality of Ang lo-Saxon 13 neo- li be ra lism and the soft utopia of Social-De­­­mocracy (New York Times, (cf. Van Zanden 1997: 33). In times of eco no mic (and po­­litical) crisis, wage 16 June 19972). Through out the se cond half of the 1990s, foreign po li cy- restraint has been the standard response of the Dutch go v ern ment. As ma kers came to admire the Ne ther lands as a ‘model coun­­try, the example early as the 1930s for in stance, the Dutch government responded to the for the continent’, as the president of the German Bun desbank Hans Tiet­­ Great De pression by sup por ting ‘in dustry efforts to bring wage levels meyer said (The Ob server, 12 October 19973). This mo del image of the down’ and by cutting ‘wages in its own public works’ (Wind mul ler 1969: Netherlands has be come wi de ly known un der the term Pol der Model; 67). Cost in creases, as was argued by Prime Mi nis ter Hendrikus Colijn, a notion that signifies successful tri par tite co op e ra­­tion and central-level would only ‘un­­­der­­mine our ex ports’ (Pas­­­­senier 1994: 26) and would dialogue between employers’ associations, unions and the go vern ment not contribute to renewed economic and jobs growth. The idea of wage on welfare state reform and other relevant socio-economic matters. restraint was also piv o tal to the centrally guided wage and price sys­­tem This study is about the very heart of the Dutch Polder Model: the of the early post-war pe­­­riod to restore the Dutch war-torn economy policy of wage re straint (in Dutch loon matiging). The Dutch Miracle was (Windmuller 1969: 326). At that time it was generally thought that ‘the said to be the result of a particular policy mix of cutbacks and reforms, only hope of pro vi d ing large-scale op por tunities for ad di­­tional em- but wage restraint constituted the very core; it be came its ‘best-known ployment through the ex­­­­­pansion of home in dus try see med to be by aspect’ (Vis ser and He me rijck 1997: fn12, 21), or its ‘sex-appeal’ (De Volks­­ keeping Dutch wages de­­li be rately below the West-Eu­­­ro pean standard’ krant, 8 March 1997)4, and determined its image. In fact, the lesson of wage (Shonfield 1965: 212). This cen­­tralised sys tem fal te red throughout the restraint outlived the fa sh io nable ups and downs of the Dutch Pol der 1960s, although the go vern ment still tried to fight the oil and eco no mic Mo del image itself (cf. Karsten & Van Veen 2008). Around the turn of the crises of the 1970s by implementing wage controls (Van Bot ten burg 1995: century, the Pol der Model was frequently de clared dead (cf. De Volk s krant, 162-165). As from the early 1980s onwards the policy of wage re straint to 29 No vember 19995; Het Fi nan ci eele Dag blad, 24 No vem ber 19996), but re store economic growth was again being prac ti ced, although now on a the idea of wage re straint still stood strong. In 2002 and 2003, two so- more voluntary basis (Vis ser and He me rijck 1997). called central agreements were reached between go vern­­ment, unions and Given this historical policy context, it is no surprise that the Dutch ‘mi- employers’ associations on wage re straint. Wage restraint, so it was widely ra cu lous’ eco no mic and jobs growth of the second half of the 1990s were be lieved, would restore Dutch economic and employment growth, as it linked to the idea of wage re straint – in po li tics, media as well as academia ar­­gu­­ably had done earlier in Dutch socio-economic history. (cf. Delsen 2000; Visser and Hemerijck 1997; Bo ven berg 1997; Van der As said, the Dutch Polder Model (or the Dutch Miracle) has received over- Ploeg 1997; Broer and Huizinga 2004). Wage restraint, so it was argued, whel ming aca demic at ten ti on (domestically, cf. Visser and Hemerijck 1997; pro vided ‘the jobs motor with so much gaso line that re cently official un- Delsen 2000; Hendriks & Toonen 2001; Van der Meer 2003; Wol­­dendorp em ploy ment went well below 300,000 persons’ (nrc Han­­dels blad, 2005; but also abroad Scharpf and Schmidt 2000; Levy 1999)7. Interestingly 9 September 1998)8. Wage restraint could do this, so the general belief though, wage restraint is almost without ex­­ception presented as the core of was, because of its positive impact on business profitability, com­­­pe ti tive- the model, its central role has ba re ly been sub jected to analysis. The pri­­mary ness and exports. As He merijck, Visser and Un ger for instance conclude purpose of this dis ser tation is to fill this gap and to exa mine the prominent about the Netherlands in 2000: ‘Looking back on twenty-five years of position of wage re straint in Dutch so cio-economic policymaking. policy ad­­just ment, one is struck by the on go ing im portance of wage restraint for main tai ning com­­pe ti tive ness’ (2000: 252). The wage restraint- competitiveness-jobs nexus is at the very heart of the Dutch Miracle story, 1.2 The central role of wage restraint in the Dutch Polder which also states that the Netherlands came to prac tice this wage re­­straint as from 1982, when unions and em ployers’ as so ci a ti ons struck the Accord The idea of wage restraint has a long history in the Netherlands and has of Was­­se naar9, where they agreed upon wage re straint in exchange for been presented for many years now as the recipe for economic recovery jobs. ‘The current Dutch eco nomic suc­­­­ces ses […] can be traced back to a 14 15 wage restraint accord struck as long as fif teen years ago’ (Fi na n ci al Times, Posing these kinds of ques ti ons pre sup po ses that there is some­­­­thing 23 Oc­­to ber 199710). As the story goes, all re le vant po litical ac tors at that in need of an ex­­plana tion. Following the Polder Mo del line of rea so ning, time came to acknowledge (or learn) that wage restraint was ne­­­ces sary to however, the need for such an en ter prise seems to be minimal; wage re store eco­­no mic and employment growth, which makes this ac­­cord ‘the restraint was sup­­ported simply because it has been good for the Dutch real be gin ning of the Dutch mi rac le’, as for mer Prime Mi­­nister Ruud Lub- economy; it leads to more pro fits, more ex ports and more jobs.